OMV Petrom: upside, even with the solidarity tax (stays BUY)
We have revised our estimates for OMV Petrom to account for the lower production guidance and lower oil and gas prices. As we still see a chance that Petrom might need to pay the 60% solidarity tax for both 2022 and 2023E, we have decided to include this in our forecasts, reflected in a reduced net profit of RON 5.5bn for 2022E, vs. RON 10.3bn reported. Even under this scenario, we see room for special dividends in 2023E, although at a lower level compared with our previous assumptions. We expect average 2023-26E EBIT of RON 6.4bn and net profit of RON 4.7bn vs. the RON 2.9bn average achieved over 2017-21. We continue to see a high probability of a positive final investment decision (FID) for Neptun and expect the project to generate RON 2.9bn of EBIT p.a. during the plateau years, on top of the results for the traditional business. We set our new price target (PT) at RON 0.611 (from RON 0.875), implying upside of 28%. Without the solidarity tax, we estimate that our PT would have been RON 0.70, or 15% higher. We maintain our BUY rating on the stock.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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